When you decide to sell your property in Israel, you will likely engage a real estate broker (metavech). Often, the broker will ask you to sign an exclusivity agreement (heskem baladiyut). This document gives the broker the sole right to market your property and collect a commission upon its sale for a defined period. While this can be a highly effective way to sell your home, it is a legally binding contract. It is crucial to understand what you are signing.
Here are the key things to look for in a real estate broker’s exclusivity agreement.
1. The Exclusivity Period (Tkufat HaBaladiyut)
This is the most important clause. It defines how long the broker has exclusive rights to sell your property.
- Legal Maximum: By law, the exclusivity period for a standard apartment or house cannot exceed six months. If the broker wants a longer period, they cannot legally enforce it unless you sign a separate document explicitly agreeing to an extension.
- Negotiable Term: The six-month period is a maximum, not a requirement. You can and should negotiate a shorter period, such as three or four months, especially in a fast-moving market. This incentivizes the broker to work quickly and gives you the flexibility to switch agents if you are not seeing results.
2. The Broker’s Commission (Dmei Tivuch)
The agreement will state the commission rate.
- Standard Rate: The standard commission for selling a property is 2% of the sale price, plus VAT (Ma’am).
- Negotiability: This rate is also negotiable, especially for higher-priced properties. Don’t be afraid to discuss it before you sign.
- Clarity on Payment: The contract should clearly state that the commission is due only upon the signing of a binding sale contract (chozeh) with a buyer the broker introduced.
3. The Broker’s Marketing Obligations
A good exclusivity agreement should not just benefit the broker; it should also detail what the broker commits to doing for you. The law requires that an agent with an exclusivity agreement perform at least two marketing actions. Look for clauses that specify the broker’s obligations, such as:
- Advertising the property on major online portals (like Yad2).
- Placing a “For Sale” sign on the property.
- Marketing to their database of potential buyers.
- Cooperating with other brokers (this is very important to maximize exposure).
4. The “Grace Period” After the Agreement Ends
Many agreements include a clause stating that if the property is sold within a certain period (e.g., 3-6 months) after the exclusivity period ends to a buyer who was introduced by the broker during the exclusivity period, the broker is still entitled to their commission. This is a reasonable clause, but ensure the timeframe is not excessive. The broker should provide you with a list of all potential buyers they showed the property to when the agreement ends.
5. Termination Clause (Sa’if Yetsi’a)
While not always standard, it’s wise to ask for a termination clause. This would allow you to exit the agreement early (e.g., with 30 days’ notice) if you are genuinely dissatisfied with the broker’s performance and can show they have not met their marketing obligations.
Before signing any exclusivity agreement, it is highly recommended to have a lawyer review it. This document grants significant rights to the broker, and you must ensure the terms are fair, clear, and in your best interest.
